EckerNet.Com

The Commerce Department is apparently celebrating over…

The U.S. economy grew in the third quarter for the first time in more than a year as government stimulus helped lift consumer spending and home building, fueling an unexpectedly strong advance.

Signaling the end of the worst recession in 70 years, the Commerce Department on Thursday said the economy expanded at an annual rate of 3.5 percent in the July-September period, snapping four down quarters with its fastest growth pace since the third quarter of 2007.

Problem is all the reason for the “growth” was extremely temporary.  Tax credits will provide a temporary boost, and it’s already dropping off.  Cash for Clunkers is the same way, although it did the additional damage off removing perfectly good resources from the national inventory.  Both did little more than changing the timing of purchases that already would have been made.

It’s the same game played by salesmen all over.  Delaying a sale close or pushing it up to meet a quota or reach the next commission hurdle.  It’s not a new game, but when it’s played with a single person’s commission check it’s harmless.  When it’s played with our national economy it’s a whole other ball game.  But then again I’m not too convinced this administration doesn’t think this is all a game.

Fact of the matter is that investment is still flat, which is pretty much required for sustained growth.  Inventories are still down.  And with Congress dragging out the health care debate, the economy must brace for a potentially huge tax increase being imposed on them.  This recession is far from over.  In fact expect an especially bad quarter coming up as purchases that would have been made, but were pushed up by tax credits and Cash for Clunkers, don’t happen and the GDP drops as a result.